CARY, N.C. -- Positive fourth-quarter numbers and encouraging results with higher-end remodels had officials at The Pantry Inc. upbeat during the convenience store retailer's December 9 investors' call.
Saying that they were "excited about what we learned in the last year," Dennis Hatchell, president and CEO for the company's 1,513-store Kangaroo Express chain pointed out the significant uptick a larger convenience store remodels had over the chain's initial, "lighter" remodels.
With regards to remodels, he said the company "changed gears," having started out with $275,000 investments that typically included things like deferred maintenance. Their expected lift in such remodels was 5% with about a third of stores surpassing that mark but another third falling short. With remodels in the $1 million range depending on levels of foodservice and additional dispensers, the lift was in the 15% range. And that didn't include the standalone lift if an added quick-serve restaurant (QSR) was involved.
After meeting a goal of building 20 new QSRs in 2014, the company has brand approvals to build 30 new ones in 2015, including the Little Caesars, Subway and Dairy Queen brands, with the majority being Little Caesars, Hatchell said.
Overall, the company reported growth in merchandise and fuel gross profit for their most recent fourth quarter, while at the same time controlling expenses. In their formal statements, officials noted a 4.5% increase in sales per customer, which drove a 2.5% increase in comparable-store merchandise sales from the year before.
"We have now had positive comparable-store merchandise sales in 11 out of our last 12 quarters," Hatchell said. "Our team is working to build on all of these results in fiscal 2015."
Click here for additional coverage of The Pantry's quarter and year.
Other insights from the call:
- The chain expects to open eight to 10 new convenience stores in fiscal 2015 that will be "scattered all over" their target markets stretching from North Carolina down to Florida.
- Operationally, the Pantry has found success with getting cashiers to promote "buy one, save 50 cents or buy another at half price" as upselling techniques. "[Cashiers] get it, and it's driving sales," Hatchell said.
- In an ongoing effort to connect with the communities they operate in, Hatchell announced the company just surpassed the $10 million mark in raising money for various military and veteran-related charities.
- The chain now has 1,275 c-stores open 24 hours. In terms of further conversions to the 24-hour format, the chain is "tapped out" as barriers such as low traffic and local regulations are prohibitive.
When asked about the progress the chain has made in terms of long-term change and performance growth, Hatchell said his team has made strides in organizing themselves, listening to customers, developing three-to-five-year plans and moving forward on those plans, but there's a long way to go. "We're only 25% the way there," Hatchel said. "It's gradual, and we're going to continue to improve as a company."
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